110 – Workplace Law Newsletter

In this edition:

First sentencing under the Health and Safety at Work Act 2015

The first sentencing decision under the new Health and Safety at Work Act 2015 was released by the District Court on 22 August 2017 and it confirms that businesses face significantly increased liability for health and safety breaches.

Budget Plastics Limited was charged under section 36(1)(a) of the Act for failing to ensure, so far as is reasonable practicable, the health and safety of workers who work for the PCBU, while the workers are at work, after a worker’s hand was dragged into a machine while he was pouring recycled plastic into it. The worker was left with only his thumb and half a forefinger as a result of the incident.

The company had identified issues with the guarding on the machine six weeks earlier but had taken no action to manage the risk. WorkSafe New Zealand considered that identifying the risk was insufficient and the company should have immediately taken action to manage it.

The WorkSafe investigation found the company had inadequate systems for identifying and managing risks, outdated safe operating procedures, and inadequate policies and processes for training staff.  In addition, the company lacked key safety features such as accessible emergency stop buttons for machinery.

The sentencing decision confirmed that fines and reparations under the new legislation could be significantly increased. The company was ultimately fined $100,000 and ordered reparation of $37,000 for emotional harm.

However, the judge recommended the starting point for the fine should be between $400,000 and $600,000. The fine was reduced based on mitigating factors and the company’s ability to pay. WorkSafe had recommended a starting point of $900,000. In comparison, the average fine for a similar case under the Health and Safety in Employment Act 1992 ranged from $30,000 to $40,000.

­Drugs and Alcohol in the Workplace: how far can Employers go with their Drug and Alcohol Policies?

Alcohol and drug use by employees are potential workplace hazards. Every employer is obliged under the Health and Safety at Work Act 2015 (Act) to take all reasonably practicable steps to ensure the health and safety of those at work.  The Act defines “hazard” as a person’s behaviour that has the potential to cause death, injury, or illness to a person.  It is clear that an employee who is under the influence of drugs or alcohol has the potential to cause such harm.

In an effort to counter such behaviour from its employees, many employers have drug and alcohol policies.  Some employers argue that policies requiring employees to be drug and alcohol free while at work, with regular testing of employees to ensure compliance, is required to demonstrate that all reasonably practicable steps are being taken to eliminate the hazard.  But just how far can these policies go?

This statement by the Employment Court in Parker v Silver Fern Farms Ltd (No 1) [2009] ERNZ 301 (EC) is often quoted by the courts:

“…Employee drug testing regimes impinge significantly upon individual rights and freedoms. Not only must policies and their application meet the legal tests of being lawful and reasonable directions to employees, but, where these are contained in policies promulgated by the employer, these should be interpreted and applied strictly..”

In the case of employees in “safety sensitive positions”, an employer is within its rights to undertake random drug and alcohol testing.  A safety sensitive position is a position which has a key and direct role in work where impaired performance could result in injury to the employee or co-workers or visitors to the employer’s premises.

In the case of all other employees, testing may take place where the employer has “reasonable cause” to suspect drug or alcohol use.  Reasonable cause may include:

  • The employee being involved in a serious or potentially serious accident or near miss;
  • The employee is drowsy or inattentive at work without explanation;
  • The employee is displaying erratic behaviour at work without explanation; or
  • The employee is unable to complete their work tasks to the expected standard.

The importance of adhering to policies was emphasised by the Employment Relations Authority in Sim v Carter Holt Harvey Ltd t/a Woodproducts New Zealand [2014] NZERA Auckland 330.  It determined that the company went outside the bounds of its policy when it required all employees at a safety-sensitive sawmill site to take a “reasonable cause” drug test following the discovery of two cannabis plants growing in the grounds outside the mill.  The company argued it was justified in testing the employees because it was reasonable to assume that whoever planted the marijuana, worked at the mill.  The Authority stated that for the employer to have a reasonable cause there must be some nexus between the reasonable cause and the test, as the test is not seen as corroborative of the reasonable cause.

An employer must gain the employee’s consent prior to testing them, although refusal to give consent may be treated as serious misconduct, for which summary dismissal could be the appropriate sanction.   Refusal must be dealt with on a case by case basis, as refusal will not in every instance amount to serious misconduct.

It is evident that employers can require employees to limit their consumption prior to coming to work so that there is no alcohol in the body whilst at work.  Employers cannot, however, require employees to not consume drugs or alcohol in their own time.  In agreement, the Employment Court in Hayllar v the Goodtime Food Company Ltd [2012] NZEmpC 153, cited an Australian case that said:

“the employer has a legitimate right (and indeed obligation) to try and eliminate the risk that employees might come to work impaired by drugs or alcohol such that they could pose a risk to health or safety.  Beyond that the employer has no right to dictate what drugs or alcohol its employees take in their own time.  Indeed, it would be unjust and unreasonable to do so.”

Drug and alcohol policies are important in the workplace, however employers need to keep in mind what they can and cannot do.  If your organisation is thinking of introducing a drug and alcohol policy with current employees, consultation with employees and unions (if applicable) is needed beforehand.  Keeping in mind, a unilaterally-imposed policy of drug and alcohol testing will not be lawful if the policy or its procedures are contrary to the terms of a collective agreement.  

First decision on availability but no guidance on reasonable compensation – Fraser v McDonald’s Restaurants (New Zealand) Limited [2017] NZEmpC 95

The Employment Court has finally had the first opportunity to consider availability under section 67D of the Employment Relations Act 2000 (Act) since it was introduced in April 2016 by the Employment Relations Amendment Act 2016.

In Fraser v McDonald’s Restaurants (New Zealand) Limited the full Employment Court held that a provision in an individual employment agreement where the employee indicated their availability, upon which the employee’s initial minimum hours were based was not an availability provision for the purpose of section 67D.

The employee’s were required to fill out charts that indicate their availability. These charts were referred to as “agreed availability” throughout the agreement and the employee’s shifts were rostered based on the “agreed availability”.

Fraser had agreed to minimum hours of 16 hours per week and 24 hours availability. Doran, the second plaintiff had agreed to a minimum of 20 hours per week and indicated narrower time-frames to accept rostered shifts. The plaintiffs sought reimbursement of an availability allowance of $5.00 per hour, which they claimed should have been paid but was not.

No availability clause

The Court held this was not a case where the employer laid down mandatory hours of availability unilaterally, but rather where it requested potential employees to indicate in advance when they would be available to accept rostered hours.

The employees were entitled to decline the additional hours, despite a lengthy notice period of two weeks being required if the additional hours were rejected.


As the agreement did not contain an availability provision, the Court did not make a determination about the quantum of compensation or consider what may be “reasonable compensation”. However, it did comment on the ability of the Court to reimburse employees for failure to pay compensation under section 67D.

The Court considered that the remedy of compensation sought by the plaintiffs was an attempt to have the Court fix compensation by way of reimbursement discreetly within the confines of section 67D. However, it held that to fix compensation by way of reimbursement would be to fix terms and conditions of employment outside its jurisdiction. The Court considered that any monetary remedies may have to be confined to some form of compensation under section 123(1)(c) of the Act, which could not be compensation or remuneration as specified under section 67D.

Lowe v Director-General of Health – Supreme Court held relief carer not an employee

­The Supreme Court has recently confirmed that a relief carer was not a ‘homeworker’ engaged by the Ministry of Health (Ministry) or District Health Board (DHB) and, therefore, not an ‘employee’ of either. The decision confirms that something more than simply a funding arrangement needs to be in place before an entity can be considered an employer.

The Employment Relations Authority had previously determined that Ms Lowe was not a homeworker engaged by the Ministry or DHB, either on their own behalf or in combination with other persons. On challenge to the Employment Court, the full Court found she was a homeworker. That decision was subsequently reversed by the Court of Appeal.

Ms Lowe was a relief carer for three elderly/disabled people pursuant to a Carer Support Scheme operated by the Ministry and DHB. As part of the scheme, the full time carers of the elderly/disabled persons submitted support forms to the Ministry seeking payment in respect of the relief care carried out by Ms Lowe. The Ministry of DHB then paid Ms Lowe directly or indirectly, by reimbursement of the full-time carer, for the relief care she provided. Ms Lowe submitted that she was paid a reimbursement “subsidy” of $75.00 per 24 hours of care work, amounting to a payment of $3.00 per hour.

The definition of employee under section 6 of the Employment Relations Act 2000 (Act) includes a ‘homeworker’. Homeworkers are defined in section 5 of the Act as a person who is (or is in substance) engaged, employed, or contracted by any other person (in the course of that other person’s trade or business to do work for that other person in a dwelling house.

Ms Lowe claimed she was a homeworker pursuant to section 5 Act (Act) and deemed to be an employee of the Ministry or DHB when she undertook relief care pursuant to the Carer Support Scheme. The implications of a determination that Ms Lowe was a homeworker were that she would then be entitled to the rights enjoyed by an employee and the Ministry and DHB would have responsibilities as an employer.

By majority the Supreme Court found that Ms Lowe was not a ‘homeworker’ and therefore not an employee of the Ministry or the DHB.

The majority decision was based on:

  • The Ministry and DHB had no role in arranging for Ms Lowe to care for clients and did not even know she was providing relief care until it received claim forms.
  • Ms Lowe had no relationship at all with the Ministry or DHB before carrying out the care and neither the Ministry nor DHB had any contact with her, aside from occasional queries from Ms Lowe about late payments.
  • Neither the Ministry nor DHB gave Ms Lowe any instructions or guidance as to how the relief care services were to be performed.
  • Ms Lowe was not party to a contract with the Ministry or DHB.
  • The engagement of Ms Lowe was an engagement by the respective primary carers and not the Ministry or DHB. The DHB’s role was to subsidise the primary carers’ cost of doing so.
  • The key aspect of engagement, being the selection of the person who is to be engaged, was clearly undertaken by the primary carer and the work undertaken by the relief carer is undertaken for the primary carer without reference to the Ministry or DHB.
  • There was no agency relationship between the primary carers, who actively engaged Ms Lowe to obtain her respite care services, and the Ministry or DHB.

Two of the five Supreme Court judges dissented and would have found Ms Lowe was a homeworker, showing that this was a finely balanced issue. Having regard to the nature of Ms Lowe’s work and the communications between the Ministry and DHB and Ms Lowe, including the claim form, Elias CJ and Glazebrook J were satisfied that Ms Lowe was employed, engaged or contracted by the Ministry or DHB to provide support care to their disabled clients. In the alternative, the judges were satisfied that Ms Lowe’s services were secured by the primary carers as agents of the Ministry or DHB.

In the dissenting judgment, Elias CJ and Glazebrook J identified the need for changes to the support care scheme, including exercising more control over the standard of care provided. The judges noted that although it may be inconvenient and expensive to give carers like Ms Lowe rights to which employees are entitled, that is no reason to read down the definition of homeworker. It was also noted, in relation to the Health and Safety at Work Act 2015, that the DHB and Ministry would, in any event – whether or not a relief carer was considered an employee, want houses safe for disabled persons and their full time carers to avoid injury.

Upcoming seminars

Workplace Law Election Special

The Lane Neave Workplace Law Team is hosting seminars in Auckland and Christchurch to discuss possible scenarios and answer burning questions about employment and immigration topics ahead of the 2017 general election.

Presenters: Fiona McMillan & Julia Strickett
Date: 7 September 2017 (tomorrow)
Time: 9.00am – 10.30am
Location: Crowne Plaza (Elliott Room), 128 Albert St, Auckland

Presenters: Andrew Shaw & Nicky Robertson
Date: 11 September 2017
Time: 1.00pm – 2.30pm
Location: Lane Neave, 141 Cambridge Terrace, Christchurch

More information ››

Game changing immigration adjustments – What employers need to know

Lane Neave is hosting a series of comprehensive immigration seminars on the game-changing new policy that has recently been introduced.

Date: Tuesday 19 September 2017
Time: 9.00am – 10.30am
Location: Lane Neave, 141 Cambridge Terrace, Christchurch

Date: Tuesday, 26 September 2017
Time: 8:30 am – 10:00 am
Location: Rangitoto Room, Mercure Hotel, 8 Custom St East, Auckland

Date: Wednesday, 4 October 2017
Time: 8:30 am – 10:00 am
Location: TBC

Date: Thursday, 5 October 2017
Time: 8:30 am – 10:00 am
Location: The Rees, 377 Frankton Rd, Queenstown

More information ››

Workplace Law Team

If you have any queries in respect of the above, or any other workplace law issues, please contact a member of Lane Neave’s Workplace Law Team:

Employment: Andrew Shaw, Fiona McMillan, Julia Hurren, Siobhan Rastrick, Gwen Drewitt; Hannah Martin; Holly Struckman; Anna Needham
Immigration: Mark Williams, Rachael Mason, Nicky Robertson, Hetish Lochan, Daniel Kruger, Julia Strickett, Rita Worner, Lavinia Shanks, Winnie Chen, Caroline Edwards, Ken Huang, Laura Hamilton
ACC: Andrew Shaw
Health and Safety: Andrew Shaw, Julia HurrenFiona McMillan, Gwen Drewitt

Disclaimer: Our aim is to assist our clients to be proactive in ensuring statutory compliance and best risk management in the area of employment law. This publication is, however, necessarily brief and general in nature. You should therefore seek professional advice before taking any action in relation to the matters dealt with in this publication.